Healthcare Pacts Pump Up Office Sector

The latest report from CB Richard Ellis says "the economic slowing trend has continued to impact the San Diego County office market with mixed results" thus far this year. A Grubb & Ellis Co. report observes that "the lack of stability in the national economy continued to adversely affect San Diego's office market in the second quarter."

MedImpact Healthcare's $60-million project is a 150,000-sf build-to-suit that San Diego-based Sudberry Properties Inc. is developing on a five-acre site at the corner of Interstate 15 and Scripps Poway Parkway. The 150,000-sf building will serve as the corporate headquarters for San Diego-based MedImpact, which is slated to occupy the building in April 2010. The new MedImpact headquarters will be in a six-story building within the Miramar Ranch North community.

MedImpact is a management company that administers pharmacy benefits on behalf of Fortune 500 corporations and employers, unions, managed-care groups, insurance carriers and third-party administrators as well as local, state and federal employee programs. Its new headquarters, which broke ground this month, will be part of Sudbury's Watermark, a 32-acre campus mapped out with three class A office buildings and several parking structures. The entire campus is designed to achieve Silver LEED certification.

[IMGCAP(2)]The 125,000 sf that Indianapolis-based drug giant Eli Lilly will occupy is in a 450,000-sf project called Campus Point at 10300 Campus Point Dr. in the University Towne Center office submarket. Financial terms of the 10-year lease were not disclosed, and owner Veralliance Properties of San Diego does not publish asking rates for Campus Point. Verailliance bought the asset in 2007 for $72 million in partnership with Prudential Real Estate Investors.

According to information from Lilly, the Campus Point space will be occupied by its Applied Molecular Evolution unit and SGX Pharmaceuticals, which Lilly recently acquired in a $64-million buyout. Lilly said in a recent press release that it would "combine both AME and its recently acquired SGX Pharmaceuticals into this location as part of the West Coast Biotechnology Center of Excellence we are creating." Lilly also plans to put its West Coast operations at the 42-acre campus when renovations are completed next March.

According to Bret E. Gossett, principal with Veralliance Properties, the lease with Lilly validates the development and investment firm's decision to acquire the Campus Point site and invest in renovations to attract biotechnology and healthcare firms like Lilly. "We are essentially rebuilding the entire site down to the steel structure with a focus on being LEED-certified," says Gossett, who adds Lilly considered a number of other alternatives in the area before choosing Campus Point. With San Diego architect Tucker Sadler creating the design, Veralliance is under way on a host of improvements, including a two-story atrium entrance, conference center, fitness room with showers and lockers, bistro and outdoor seating area.